Financial Analysis: National Instruments (NATI) & Smith Micro Software (SMSI)

Smith Micro Software (NASDAQ: SMSI) and National Instruments (NASDAQ:NATI) are both technology companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Volatility and Risk

Smith Micro Software has a beta of 0.19, meaning that its stock price is 81% less volatile than the S&P 500. Comparatively, National Instruments has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500.

Institutional and Insider Ownership

14.9% of Smith Micro Software shares are held by institutional investors. Comparatively, 78.2% of National Instruments shares are held by institutional investors. 22.0% of Smith Micro Software shares are held by company insiders. Comparatively, 9.9% of National Instruments shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Smith Micro Software and National Instruments, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Smith Micro Software 0 0 0 0 N/A
National Instruments 0 1 1 0 2.50

National Instruments has a consensus target price of $40.00, indicating a potential downside of 14.00%. Given National Instruments’ higher possible upside, analysts clearly believe National Instruments is more favorable than Smith Micro Software.

Profitability

This table compares Smith Micro Software and National Instruments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Smith Micro Software -39.83% -265.05% -37.51%
National Instruments 8.72% 10.16% 7.64%

Earnings and Valuation

This table compares Smith Micro Software and National Instruments’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Smith Micro Software $28.24 million 1.27 -$14.51 million ($0.73) -3.44
National Instruments $1.23 billion 4.95 $82.73 million $0.81 57.42

National Instruments has higher revenue and earnings than Smith Micro Software. Smith Micro Software is trading at a lower price-to-earnings ratio than National Instruments, indicating that it is currently the more affordable of the two stocks.

Dividends

National Instruments pays an annual dividend of $0.84 per share and has a dividend yield of 1.8%. Smith Micro Software does not pay a dividend. National Instruments pays out 103.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

National Instruments beats Smith Micro Software on 13 of the 15 factors compared between the two stocks.

About Smith Micro Software

Smith Micro Software, Inc. is a provider of software solutions. The Company operates through two segments: Wireless and Graphics. The Company offers multi-platform, modular solutions organized into three product families, including NetWise, CommSuite and QuickLink. For mobile network operators, NetWise helps reduce cellular congestion and optimize data traffic across third-generation (3G), fourth-generation (4G) and wireless fidelity (Wi-Fi) networks. Graphics segment includes its consumer-based products, such as Poser, Anime Studio, Manga Studio, MotionArtist and StuffIt. The Graphics segment develops a range of software, including graphic design and animation, compression and personal computer (PC)/Mac utilities, for consumers, professional artists and educators. The Company also offers Family Safety platform for family locator and parental controls.

About National Instruments

National Instruments Corporation (NI) designs, manufactures and sells systems to engineers and scientists. The Company offers a line of measurement, automation and control products. It offers products, technology and services, which include system design software, programming tools, application software, modular hardware products and related driver software, production test systems, NI education platform, software products for teaching and hardware products for teaching. It also offers NI Services, including hardware services and maintenance, software maintenance services, and training and certification. Its products are used across various industries in a range of applications, including research and development, simulation and modeling, prototype and validation, production testing and industrial control and field and factory service and repair. It serves various industries and applications, such as consumer electronics, commercial aerospace, telecommunications and others.

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